20 Feb 15
Preamble - 20 February 2015

This week we finalised our submission to Treasury in relation to the draft legislation relating to look-through treatment of instalment warrants and receipts.

This is a positive initiative by the Government albeit this is a long-awaited legislative clarification.

We are supportive of the Government’s stated policy intent behind this measure, namely to: ‘provide look-through income tax treatment for instalment warrants and instalment receipts to remove uncertainty about the taxation treatment of such arrangements and to prevent disruption of the significant market that existed for such arrangements at the time of announcement of this measure.’

In summary, our submission offers the following comments to ensure that the legislation gives effect to the policy intent:

Broaden the underlying assets covered;

Include a saving rule for matters outside the investor’s control;

Remove (or amend) the limited recourse requirement;

Allow charges over underlying assets;

Clarify that it is the immediate owner who is deemed to own the asset;

Clarify that other look-through provisions continue to apply if you fall outside these amendments;

Clarify that other look-through provisions do not apply if you fall inside these amendments;

Ensure that the qualified person rules will operate as intended; and

In relation to Limited Recourse Borrowing Arrangements, use consistent terminology and ensure that the amendments apply after any borrowing is repaid.

A detailed discussion of these issues may be found in our submission to Treasury. Thank you to members who contributed to this paper.